Hoover Defense Seeks Mistrial Over Documents

Arguing that prosecutors deliberately withheld “critical” statements by J. David (Jerry) Dominelli that could clear their client, lawyers for Nancy Hoover Hunter on Wednesday asked a federal judge to dismiss the 234-count indictment against her.

In a written motion filed with the court, Hoover’s attorneys cited transcripts of grand jury testimony and other documents in which Dominelli claimed that Hunter, his former live-in companion, was unaware of the illegal activity that led to the collapse of J. David & Co., the La Jolla investment they operated.

Lawyer Wants Dismissal

“The prosecutor’s suppression of Dominelli’s statements exonerating Hunter from involvement in major aspects of his fraud mandates the dismissal of the indictment,” the lawyers said in the motion filed with U. S. District Judge Earl B. Gilliam.

The lawyers, Richard Marmaro and Robert S. Brewer, based their motion on a federal court rule known as the Brady Doctrine, which requires prosecutors to turn over to defense attorneys all information favorable to the defendant, generally as soon as the material is discovered.

Marmaro and Brewer have been engaged in an unusually bitter dispute with Assistant U. S. Atty. S. Gay Hugo over the production of documents since before the trial began nearly two months ago. The defense has made repeated motions for a mistrial, all of which have been turned down by Gilliam.

“On May 18, 1989, the prosecutor, in one fell swoop, topped all of her previous misconduct by disclosing heretofore suppressed Brady material which had been in her possession for years,” the lawyers said in their motion Wednesday.

“This is critical exculpatory material as well as evidence which could have been used by the defense to effectively cross-examine several of the government’s witnesses who have already testified,” the motion says.

Accused of Suppression

The lawyers said there is “no plausible explanation or justification” for the prosecution’s withholding of Dominelli’s statements, and accused Hugo of deliberately suppressing the information.

“She has stopped playing by the rules, and she has adopted a ‘win at all costs’ strategy, trampling along the way on court orders, due process rights and fundamental fairness,” the motion says.

Gilliam is expected to hold a hearing on the motion today or Friday.

Because of a gag order imposed by Gilliam last week, Hugo was not permitted to respond to reporters’ questions about the new defense allegations.

Hunter is charged with 234 counts of fraud, conspiracy, income-tax evasion and making false statements to a federal agent. The charges stem from her involvement as a top executive in J. David & Co., which collapsed in 1984 when nervous investors forced it into bankruptcy court. The ensuing investigations revealed a huge Ponzi scheme, in which money from new clients was used to pay off old investors and little or no trading was done.

Dominelli pleaded guilty to federal charges and is serving a 20-year prison sentence.

Hunter’s lawyers are attempting to convince the jury that Dominelli alone was responsible for the $180-million fraud, and that Hunter was blinded by her love for him.

At issue in the mistrial motion are six documents dated from Feb. 15, 1984, to Jan. 28, 1988. The defense obtained the documents last week from the prosecutors.

Dominelli Interview

In one of the documents, an FBI memorandum prepared April 16, 1985, an unnamed agent summarized an interview he had with Dominelli.

“Dominelli advised that no one else involved in J. David & Co. or J. David Banking Co. Ltd. knew of the fact that the business was a sham, including . . . Nancy Hoover or any of the salesmen. . . . He said no one ever knew of the financial trouble the company was in until the end because he discussed it with no one, including (Mark) Yarry, Hoover or anyone else,” the memorandum says. Yarry was another top J. David executive.

Another of the documents is a note written by Dominelli on Feb. 15, 1984, about the time the firm was collapsing. Referring to Yarry and Hunter, Dominelli said: “At no time were they aware of any actions I may have taken with regard to client funds entrusted to me or any of my companies. . . . I assume full responsibility for any and all discrepancies that may arise . . . .”

Also at issue is a transcript of Dominelli’s testimony before a grand jury on May 20, 1986. During that session, under questioning by Hugo, Dominelli said that he, not Hunter, opened all the mail containing confirmation information about trades he made through brokerage houses. Hunter, he said, opened all other mail.

Hugo had claimed in her opening statement to the jury that Hunter opened all the firm’s mail.

“This testimony is a direct rebuttal of the government’s theory,” Hunter’s lawyers said in their motion.

They also alleged that Hugo was guilty of “blatant lies” when she said in court more than a month ago that all so-called “Brady material” had been turned over to the defense.

The trial continues today.